A nonprofit art gallery? Nonprofits may not be what you think

Elizabeth Sanjuan and Ken Brown are owners of the new nonprofit Gallery… (Ginny Dixon, Correspondent )

March 23, 2013|By Doreen Hemlock, SunSentinel

Browse at Gallery 2014 on Harrison Street in Hollywood and you might think you're in a typical art gallery. It's studded with paintings and sculptures from local and international artists, and art classes are offered in the back.

But unlike most galleries in South Florida, the new space is a nonprofit organization.

Co-owners Elizabeth Sanjuan and Ken Brown don't aim to make any money from the venture. They're already big patrons of the arts and donors for arts scholarships. So when the couple decided to follow their hearts and start a gallery, they figured the best way to set up their venture was the nonprofit route. That way any money beyond their costs goes back into arts education and community projects.

"If you make it clear that your operating surplus is not going into your pockets, I think people will feel good about what they're buying," said Brown, an engineer and financier who also paints. "And as a nonprofit, we can apply for grants to supplement our efforts" to expand arts education.

Nonprofits make up roughly 5 percent of the U.S. economy and 10 percent of U.S. jobs, studies show. In Broward and Palm Beach counties, experts estimate there are more than 12,000 nonprofit groups. But the strength of nonprofits often is underestimated, because many ventures look just like for-profit businesses.

Consider Hospice by the Sea, the Boca Raton-based program that helps patients and families with end-of-life issues. It sees around 575 patients a day, some in hospitals but most in their homes. It operates with about 560 full-and part-time employees, 460 volunteers and an annual budget of about $59 million, funded by party by Medicare programs, said chief executive Paula J. Alderson.

The nonprofit Hospice by the Sea often is confused with other hospice groups that operate for profit, but the difference matters, said Alderson.

"If people are donating to a for-profit hospice and understand that the money may go to shareholders or for other purposes, they may not donate," preferring a nonprofit where cash goes to programs, she said.

Or consider SunTrolley, the community bus service for greater Fort Lauderdale that often is confused with a government agency. It's a Transport Management Association, a nonprofit created by Congress in the 1980s to encourage public transportation after dramatic oil price increases.

Sun Trolley now handles about 42,000 passengers a month, including about half who ride for free. It has a staff of four and the bus company it subcontracts to for routes employs about two dozen people. The venture operates on a budget of abut $1.6 million a year, said chief executive Patricia Zeiler.

"Public transportation in no way pays for itself," Zeiler said. "There's no profit in it."

Nowadays, nonprofits are so diverse that some nonprofits even offer technical services to help others.. Nonprofits First of Boynton Beach, for example, assists with accounting, information technology and training. It also helps nonprofits launch ventures that can earn the groups steady income, reducing their dependence on donations or grants.

Such income-earning ventures — called social enterprises for their ties to social causes — often include catering businesses that use food service graduates who are disabled or formerly homeless, or thrift stores that earn cash for charities, said Christopher Noe, the group's director of social investment.

"Social enterprise is a whole new world, where capitalism is meeting the social space," Noe said. "There are a lot of hybrids that are emerging" that mix business, nonprofits and social responsibility.

In general, nonprofits differ from for-profit groups in two key financial ways: They are set up under Internal Revenue Service rules to not pay income tax and to accept donations that can be tax-deductible. But increasingly, the groups operate like businesses, with an eye toward efficiency. They simply channel any surplus back into operations to fulfill their social mission, not to reward owners or stockholders.

That explains why many colleges and hospitals with social aims are nonprofits, among them Nova Southeastern University in Davie and Bethesda Hospital East of Boynton Beach. It also explains why more ventures with a community focus can be expected to go the nonprofit route, much like Gallery 2014.

South Florida nonprofits that you may not think are nonprofits

—Broward Center for the Performing Arts in Fort Lauderdale, a performing arts venue